DeCandia v Hallmark Cards Australia Ltd (No. 3) [2004] QIRC 153 (2004) 177 QGIG 30

30 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 3 September, 2004 QUEENSLAND INDUSTRIAL RELATIONS COMMISSION Industrial Relations Act 1999 – s. 335 – costs Len DeCandia AND Hallmark Cards Australia Limited (No. 3) (No. B1288 of 2003) VICE PRESIDENT LINNANE 23 August 2004 Costs application – Respondent’s refusal to accept Applicant’s offer to settle was an unreasonable act or omission connected with the conduct of the application – application granted – Industrial Relations Act 1999 s. 335(1)(b). DECISION [1] This is an application by Len DeCandia (Applicant) for costs to be ordered against Hallmark Cards Australia Limited (Respondent). On 16 April 2004 I released a decision in Len DeCandia v Hallmark Cards Australia Limited 175 QGIG 1376 wherein I found that the Applicant was unfairly dismissed. I then released a further decision on 4 June 2004 wherein I ordered the Respondent to pay to the Applicant an amount of $19,636.76 in compensation being 22 weeks’ pay @ $892.58 per week: see Len DeCandia v Hallmark Cards Australia Limited (No. 2) (2004) 176 QGIG 215. [2] The only basis upon which I can order costs is that found in s. 335(1)(b) of the Industrial Relations Act 1999 (Act) which provides as follows: “335 Costs (1) The court or commission may order a party to an application to pay costs, including witness expenses and other expenses, incurred by another party if satisfied – … (b) or an application for reinstatement – the party caused costs, including witness expenses and other expenses, to be incurred by the other party because of an unreasonable act or omission connected with the conduct of the application.”. [3] The Applicant relies upon the following three grounds in support of his application for costs: (i) that the Respondent was unreasonable in not negotiating a settlement of the substantive application; (ii) that the Respondent was unreasonable in asserting that it would pursue a costs application against the Applicant; and (iii) that the Respondent acted unreasonably by requiring a further day of hearing which caused additional costs to the Applicant. [4] The Applicant relies upon the Affidavit of Andrew Scott Frieberg, Solicitor for the Applicant, which forms part of the application in this matter. Attached to that Affidavit are the following documents: • correspondence from Solicitors for the Applicant to the Australian Industry Group, Industrial Organisation of Employers (Queensland) (AIG) dated 10 November 2003. In this correspondence Solicitors for the Applicant outlined what they saw as the failure of the Respondent to provide the Applicant procedural fairness when dismissing the Applicant from employment, referred to the fact that the Applicant understood that, prior to his dismissal, the Respondent had made a decision to make a number of Account Managers redundant, and, then Solicitors for the Applicant put an offer to the Respondent in the following terms: (i) that the Respondent make payment of an amount equivalent of the redundancy which would have been payable to the Applicant had he been made redundant rather than dismissed; and (ii) the costs incurred by the Applicant in bringing the unfair dismissal application. This offer was open until 17 November 2003. • a facsimile from the AIG to the Solicitors for the Applicant dated 18 November 2003 making a counter offer in the following relevant terms: (i) the Applicant resign his employment effective 24 July 2003; and (ii) the Respondent pay the Applicant an amount of four (4) weeks’ pay net of tax. This offer was open until 18 November 2003. • a facsimile from the Solicitors for the Applicant to the AIG dated 19 November 2003 which counter offered in the following terms: (i) that the Respondent pay the Applicant the equivalent of six (6) weeks’ pay as a redundancy package; (ii) that all terms and deductions of such payment reflect a redundancy payment; and (iii) that such a redundancy is noted on the Applicant’s employment file. This offer was to remain open until 21 November 2003. • a facsimile from the AIG to the Solicitors for the Applicant dated 20 November 2003 advising that they had received instructions from the Respondent to reject the offer and make no further offer. -- 1 of 3 -- 3 September, 2004 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 31 • a facsimile from the AIG to the Solicitors for the Applicant dated 5 December 2003 which advised that if the Applicant’s application was unsuccessful it reserved its right to seek an order for costs against the Applicant. [5] During the course of the hearing of this application I indicated that I did not find the actions of the agent for the Respondent in advising the Commission, towards the end of the first day of hearing, of her preference to make oral submissions on the second day of hearing rather than the afternoon of the first day of hearing, to be unreasonable. The matter had been set down for two days of hearing. The third substantive ground does therefore not support an order for costs under s. 335(1)(b) of the Act. [6] In Doyles Construction Lawyers v Serratore (No 2) (2002) 170 QGIG 103 a Full Bench of the Commission considered that the “decision of McKenzie P in Goldman v Data General Australia Pty Ltd 144 QGIG 379, albeit based upon the provisions of the Industrial Relations Act 1990, is descriptive of the correct approach to be adopted in assessing whether there have been unreasonable acts or omissions in connection with the conduct of an application”. In Goldman v Data General Australia Pty Ltd McKenzie P said: “Nonetheless, it does make the point that some reinstatement cases by reason of the procedural steps involved and their nature, length and complexity have rather got away from the ideal of inexpensive dispute resolution. There may be cases where at the end of the day it can be seen that a party has acted unfairly, unreasonably or improperly in or in the course of pursuing or resisting such relief and that those actions were so unjustifiable that the proceedings have worked as an act of oppression to the other side…”. [7] As Hall P in Coco’s Trading Pty Ltd v O’Reilly said the “critical issue is whether an omission to mediate in a constructive way and in particular an omission to respond in a constructive way to reasonable offers of settlement may be held to be an ‘omission connected with the conduct of the application’ within the meaning of s. 335(1)(b)”. Further the President said that “[i]f conduct in relation to mediated resolution, and in particular conduct related to the acceptance or non-acceptance of reasonable offers, falls within the concept of an ‘unreasonable act or omission connected with the conduct of the application’, parties will be adequately protected by the approach developed by Mackenzie P and by the circumstance that, even if a power to award costs arises, it is a power controlled by the exercise of an unfettered discretion.”. [8] Mr Shepley, Counsel for the Applicant, also referred me to the Explanatory Note to s. 225(1)(b) of the Workplace Relations Act 1997 which was a similar provision to that now found in s. 335(1)(b) of the Act. In particular I was referred to the following passage: “Subclause 225(1)(b) provides for an order for costs to be made against an employer or an employee if the commission is satisfied that an unreasonable act or omission by the party caused costs to be incurred, in connection with the proceedings, by the other party. For example, where a party acted unreasonably in a conciliation conference or on arbitration, by failing to discontinue a matter or failing to agree to terms of settlement, then the commission may make an order for costs against the party.”. [9] The Respondent relies upon the Affidavit of Anthony Mills filed in the Industrial Registry on 2 August 2004 in opposing the application. Mr Mills’ evidence was that whilst the Respondent did, at or about the time of the Applicant’s dismissal, make changes to the territories in Queensland and did make a number of positions redundant, the position that the Applicant held still remains the same today as it did when the Applicant was employed with the Respondent. A replacement for the Applicant commenced employment with the Respondent on 15 September 2003. I accept that evidence. [10] It was Mr Mills’ evidence that, because the offer of 10 November 2003 was framed in terms of a redundancy and the position that the Applicant held was not made redundant, that offer was rejected. As for the offer to settle dated 19 November 2003 once again Mr Mills’ states that he could not agree to the offer as it would not have been a “bona fide redundancy” and he formed the view that there was “no point in making any further offers, given the Applicant’s attitude that he wanted any payment paid as a redundancy.”. [11] The outcome of the unfair dismissal application was that the Respondent was ordered to pay the Applicant the equivalent of twenty-two weeks’ pay. In my view the offers by the Applicant to settle the matter, particularly the offer of 19 November 2004, was an offer to receive a particular amount of money in the hand. The Respondent, rightly in my view, rejected the notion of any payment being by way of redundancy given that there was no genuine redundancy. A reasonable response to the offer of 19 November 2003 would have been to calculate the net amount to the Applicant of six weeks’ redundancy pay and make an offer which would have given the Applicant the same or similar net amount, perhaps nine weeks’ pay. The offer had already been made by the Respondent that it would accept a resignation from the Applicant. The reinstatement of that offer would, in my view, have dealt with the Applicant’s offer that “a redundancy is noted on his employment file”. Clearly the Applicant did not want a dismissal being noted on his employment file with the Respondent. Instead that offer of 19 November 2003 from the Solicitors for the Applicant was met with outright rejection and no counter offer. [12] Mr Watson, Counsel for the Respondent, submits that the Respondent acted reasonably in rejecting the Applicant’s offers to settle the matter given that it believed it had an admission that the Applicant had falsely claimed expenses. It should be noted in this regard that the s. 75 Certificate issued by the Member who conciliated this matter stated the following: “The Commission indicated that it would be up to another Member of the Commission to determine whether, in all of the circumstances, the punishment fitted the actual crime.”. [13] Ultimately I found that the punishment did not fit the crime. The Respondent was thus on notice as and from 27 August 2003 that the likely issue to be determined at the hearing was whether “the punishment fitted the actual crime”. [14] Further, Mr Watson submitted that the Respondent did enter into “honest attempts” to settle that matter. It was argued that when the Applicant reduced its offer to settle in the correspondence of 19 November 2003 the Respondent was entitled to consider that the Applicant viewed his own case as not being strong. I do not accept this proposition. Many applicants in unfair dismissal matters, when faced with the costs of litigation, make offers to settle well below the amounts they believe they can achieve through litigation. Ultimately applicants have to make a cost/benefit analysis. In this instance the Applicant had to consider the costs of counsel and solicitor for a two day hearing. [15] Asbury C in Barsha v Motor Finance Wizard (Sales) Pty Ltd (2003) 173 QGIG 609 cited a number of authorities where Members of the Commission have awarded costs where there has been a failure to respond reasonably to a reasonable offer to settle. [16] In all the circumstances I have formed the view that the offer of 19 November 2003 was reasonable. Further, I find that the actions of the Respondent, outlined in its facsimile of 20 November 2003, was an unreasonable act or omission connected with the conduct of the case and I have decided to exercise my discretion to award costs against the Respondent. -- 2 of 3 -- 32 QUEENSLAND GOVERNMENT INDUSTRIAL GAZETTE 3 September, 2004 [17] The Applicant has sought costs of $6,851.00 based on Scale G of the Schedule of Costs in the Magistrates Court. The award of compensation was $19,636.76. I endorse the comments of the President in Coco’s Trading Pty Ltd v O’Reilly that an award of costs in that matter based upon the scale appropriate to the award of $7,000 in proceedings in the Magistrates Court was “(in truth) more vulnerable to attack as too low rather than too high”. [18] The application before me would have resulted in a remedy of reinstatement but for the indulgence given to the Respondent to adduce evidence on why reinstatement was impracticable. The value of reinstatement to the Applicant would far exceed the amount provided for in Scale G of the Schedule of Costs in the Magistrates Court. The Act provides for reinstatement as the primary remedy in unfair dismissal cases. It is only where reinstatement and re-employment are found to be impractical does the Commission order compensation to be paid. In those circumstances I am of the view that unfair dismissal proceedings should not necessarily result in awards of costs based on a scale which aligns itself to the amount of compensation or damages ordered. [19] The amount sought in costs includes an amount of $869 for instructions to sue. I do not accept that any amount connected with initiating the unfair dismissal application can be seen as an unreasonable act or omission connected with the conduct of the application and I reject any claim in that regard: see decision of President in Coco’s Trading Pty Ltd v O’Reilly at p. 104. [20] Whilst I have had regard to Scale G of the Magistrates Court Scale I have determined to make an order that the Respondent pay the Applicant a global amount of $6,400.00 in costs. That amount is to be paid to the Applicant within twenty two (22) days of release of this decision. Order accordingly. D.M. LINNANE, Vice President. Hearing Details: 2004 9 August Appearances: Mr J. Shepley, instructed by Primrose Couper Cronin Rudkin Lawyers, for the Applicant. Mr K. Watson, instructed by the Australian Industry Group, Industrial Organisation of Employers (Queensland), for the Respondent. -- 3 of 3 --